Economics

Korea’s income inequality is shown to be the worst. According to the International Monetary Fund, Top 10 percent of the entire Korean population receives 45 percent of the total income. As income inequality problems in Korea have exacerbated over the last two decades, the gap between the haves and the have-nots in other Asian nations has also clearly become apparent. Singapore follows Korea by 10 percent of the whole population holding 42 percent of the country’s wealth, and it is followed by Japan with 41 percent.

As expressing its concerns, IMF noted that “countries in the Asia-Pacific region need to address inequality of opportunities by broadening access to education, health, and financial services.”

In order to delve into the income inequality matter, it is important to view income inequality as a source of inappropriate investment and development in health and education, because wealth is concentrated in the top few percentage of the population. The widening gap between the rich and the poor is a side effect of the rapid economic growth around Asian countries. From 1990 to 2015, even in the midst of the financial crisis that struck Asia and the world, the region grew at around 6 percent, annually.

The perspective of regarding China and India as the “happily ever after countries,” is misleading as such a view neglects the systemic problems plaguing the nations today. The success of these countries is defined by rapid and continuous rates of growth, both aggregate and per capita national income. In addition to this economic growth, substantial reduction in income poverty within these countries draws the world’s attention to consult numerous fiscal policies. Notwithstanding this eye-opening economic progress, the strategy of development had brought relatively high income growth without mammoth improvement in the resource, especially labor, market. This disproportionate economic expansion, hence, has been accompanied by rising inequality in Asian economies, as referring to the increase in Gini coefficient from 36 in 1990 to 40 in 2013 in Asia.

Income inequality needs to be relieved in order to achieve social justice. Regardless of the gradual alterations in fiscal and social policies, fiscal policy and technological progress are crucial forces that can resolve income inequality in advanced economies, while human capital itself has been the sole working force in developing countries. The apt adoption of fiscal policy will combat rising inequality by broadening the coverage of social welfare system.

Education is particularly a suitable solution to rising inequality. Government-driven education programs will further provide the people with diverse opportunities to be involved in many workplaces. Not only students, but adults, who are already involved in their jobs, should be provided with opportunities to hone professional skills, by which they can utilize the acquired skill as a new work-driving force.

40 years ago, Bangladesh was the second poorest country in the world. Responding to inequality in its economic system, the Bangladesh government focused their policies on public services, microfinance programs, education, and the private sector. Likewise, the world should take steps in this direction.

One of the biggest issues in the last month regarding economics is the Brexit. UK Secretary of State for Business, Sajid Javid visited India right after the UK citizens “sentenced” UK to exit the EU. Likewise, while we spotlight China to be the next USA, superpowers are paying attention to India, the rising power of Asia.

There are several attractions of India, including their peculiarity in population. Most of the nations are turning to an aging society; India, on the other hand, is expected to maintain their balanced pyramid of an average age of 29 even after 2040, when they drag China down and become the most populous nation. Moreover, India’s workforces are cheap; they are paid only 5.18$ per day while China pays their laborers 22.64$ a day which is even dwindling. This leads to a shortage of professions, for instance, according to an ad, a textile company offers at least 10,000$ for an experienced worker. In fact, one of the largest portions of US’s export to India is their professions. Thanks to these merits, India had the highest GDP growth rate in the world of 7.3% and estimated to be the top three leading countries in the 2030s.

U.S places India high on their goal list to create a so-called “alliance.” Obama considers India to be one of the fastest growing markets and the best choice to stand against China due to India’s territorial advantage. It is why U.S and US companies are eager to enter India. Obama, in fact, promised to invest 4 billion dollars in the following two years at the US-India Summit. To delve into the cases of US companies, most of them focus on the point that the middle class of India can consume more than any other middle classes in the world. Large corporations of US like Apple, Google, Amazon, and Facebook look forward that the 156 million middle class would buy more iPhones, use more internet, deliver more products, and use more social media. In a nutshell, Obama and giant corporations are working together to gain the upper hand in India politically and economically.

If you think in a different way, taking advantage of US would be the best choice for Narendra Modi, the prime minister of India. By this measure, India was able to gain “privilege” from US such as in the case of US giving implied allowance for India to import Iran’s oil, and achieve their prerequisite of the Modinomics, which is to draw foreign investments. It’s time for Modinomics, the
Indian Thatcherism, to prove its power by boosting India up to join the leading nations.